Sep 21 2018
In this special report, industry analyst Iyman Uvais discusses the potential pitfalls Brexit poses to UK universities
Universities in the United Kingdom receive income from a wide range of sources. According to the Higher Education Statistics Agency (HESA), total income for UK universities amounted to £35.7 billion in 2016-17, up from £34.7 billion in the previous year. Tuition fees accounted for 50% of total income, while approximately 16.6% came from research grants and contracts. Although total income received from EU sources was less than £1 billion, nearly 15% of research grants and contracts were obtained from the European Union. Overall, the United Kingdom is a net receiver of EU funding for research. The strength of UK researchers compared with EU peers has allowed UK universities to receive a disproportionate share of the funding distributed across the 28 EU member states. This has included the €80 billion (approximately £71.2 billion) Horizon 2020 programme, which is the largest European Funding programme for research and innovations, running from 2014 to 2020. The UK has received €11 billion (approximately £9.8 billion) since the scheme began in 2014. This came at the same time as UK government funding for universities fell significantly.
Recent figures from the Department for Business, Energy and Industrial Strategy indicate that the share of the EU’s Horizon 2020 Research project funds allocated to UK universities dropped to 24.2% by the end of May 2018, down from a high of 25.5% in February 2017, as British universities endure rising financial pressures ahead of the UK’s impending departure from the European Union. This translates to €136 million (approximately £121 million) of funding been lost between February 2017 and May 2018, assuming that funding had been maintained at the February 2017 level. Nevertheless, UK universities are not expected to face major short-term funding constraints, as the UK government has guaranteed that it will underwrite all payments to the EU’s existing Horizon 2020 grant recipients until the programme ends in 2020 in the event of no-deal Brexit. However, long-term funding remains uncertain. The United Kingdom could participate in Horizon Europe, the next round of funding for 2021 to 2027, as a non-EU ‘associate’ partner, but this would mean that it would not have a political voice to influence the programme. The United Kingdom would also not be able to receive funds greater than that which it pays in. A loss of funding in the long term could have a devastating impact on the research capabilities of UK universities and on vital collaboration with European universities. According to the Russell Group, a self-selected association of Britain’s top 24 research universities, more than 150,000 collaborative links currently exists between UK and EU universities. A loss in funding can lead to a slowdown in the UK economy, as research collaboration has helped shape the United Kingdom through health and disease research and climate study. In addition, concerns regarding UK qualifications being valid in the European Union could deter EU post-graduate students pursuing courses in the United Kingdom. This could also hamper research capabilities of UK universities, as many of the top academics currently working in UK universities arrived as PhD students.
The HESA reported that 17.4% of the 206,870 academic staff employed in the United Kingdom in 2016-17 came from EU countries. Many of the European academics working in the United Kingdom are world-leading experts in a range of disciplines. Figures published in January 2018 by the Liberal Democrats revealed that there had been a 19% rise in the number of EU academics resigning from British universities in 2016-17 compared with the previous year, primarily due to concerns about their rights once the United Kingdom leaves the European Union. The fall in the value of the pound following the referendum also made positions overseas more attractive and contributed to the surge in resignations. According to the Independent, the University of Oxford registered the highest number of resignations in the 2016-17, with 230 resignations, while the University of Cambridge had 173 EU staff members leave. In June 2018, the government announced that EU nationals can continue arriving, working and settling in the UK until December 2020, in a move intended to alleviate fears concerning the rights of EU nationals and stem the number of EU academics leaving the United Kingdom. Nevertheless, any immigration restrictions imposed after 2020 could lead to a sharper drop in the number of EU academics entering the United Kingdom.
Another key area of concern is a possible fall in the number of EU students coming to study in the United Kingdom. The education sector in the United Kingdom is one of the most international in the world. There are an estimated 135,000 EU students currently attending UK universities, according the HESA, with EU students most concentrated in elite Russell Group universities. The free movement of people has allowed EU students to study in the United Kingdom without being subject to immigration controls. The benefit of paying the same undergraduate fees paid by UK students, the ability to receive government-backed loans to fund tuition fees and the global reputation of UK universities have all made the United Kingdom an attractive place to study. The number of European students enrolling at UK universities has remained buoyant since the EU referendum, however, worries started to escalate regarding a potential slump in EU student enrolment numbers when the United Kingdom exits the European Union. In April 2018, Universities UK, the vice-chancellors’ umbrella body, warned that universities will face steep declines in EU enrolment numbers if EU students have to pay international student fees of up to £20,000 on some courses with no access to a loan. However, in July 2018, the Department for Education announced that EU students enrolling at British universities in Autumn 2019 will pay the same fees as UK students and will also have access to government-backed loans through the length of their degrees. The Scottish and Welsh governments also made similar decisions. This should ensure that EU student enrolments numbers steady even after the UK exits the European Union in March 2019. However, no decision has been made about the long-term status of EU students. Any moves to increase fees, reduce access to government-backed loans and greater immigration controls could lead to a significant fall in EU student enrolment numbers.
For a printable PDF of Back to School: The effect of Brexit on UK universities, click here.
IBISWorld industry reports used in this spotlight report: